A Tesla super charger station. Image source: Flickr Image.
GM and Tesla are among the well-known industry players in the automotive sector, with both of them racing to develop the next generation of cutting-edge technology in the all-electric vehicle space.
Tesla and GM have been trying to win the EV race by spending billions of dollars on research and development, hoping to create not only better and longer-range electric vehicles but also the emerging self-driving technology.
That said, both companies’ stocks are worth buying and have their respective pros and cons when it comes to investing in their stocks.
This article compares both Tesla and GM’s stocks in several aspects, including vehicle deliveries, revenue growth, profitability and cash flow just to name a few and find out which company’s stock is a better buy.
Let’s go take a look!
Tesla Vs GM’s Stock Topics
1. Vehicle Sales Or Deliveries
2. Total Net Sales And Revenue
3. Gross Profit Margin
4. Operating Profit Margin
5. Net Profit Margin
6. Operating Cash Flow Margin
7. Free Cash Flow Margin
8. Net Debt Margin
9. Dividends
10. Conclusion
Vehicle Sales Or Deliveries
Tesla vs GM in vehicle sales
Let’s first look at Tesla and GM’s vehicle delivery results over the last 3 years.
Since both Tesla and GM are car manufacturers, vehicle delivery results are crucial indicators of growth for both companies.
Moreover, vehicle deliveries are also closely correlated to financial well-being, especially in terms of sales and revenue.
Therefore, vehicle deliveries can make or break an automaker.
That said, in terms of vehicle deliveries, GM’s TTM result came in at about 3.0 million while Tesla delivered about 1.0 million vehicles as of fiscal Q2 2022.
As of fiscal 2022 Q2, GM’s vehicle delivery figure was 3X higher than the number of Tesla.
While Tesla’s vehicle sales have been far fewer than that of General Motors, their figures have been in the opposite trend.
For example, GM’s vehicle deliveries have been declining while Tesla’s vehicle deliveries have been increasing in the last 3 years.
Between fiscal 2017 and 2022, GM’s vehicle deliveries have declined quite substantially, as much as 45% since 2017.
On the flip side, Tesla’s total vehicle deliveries have increased quite significantly during the same period.
Between fiscal 2017 and 2022, Tesla’s figures went from 100,000 to 1,000,000 units as of Q2 2022, representing a growth rate of over 800% in the last 3 years!
Therefore, in terms of vehicle sales growth rates, Tesla definitely beats General Motors hands down.
Total Net Sales And Revenue
Tesla vs GM in total net sales and revenue
Similar to vehicle sales growth rate, total net sales and revenue growth rate is other important factor to consider when it comes to investing in Tesla and General Motors’ stocks.
As such, the above chart shows Tesla and GM’s total net sales and revenue for the period between fiscal 2017 and 2022.
Similar to the vehicle delivery chart, the revenue chart also shows an opposite trend for both Tesla’s and GM’s total net sales and revenue.
For example, Tesla’s total revenue has been on the rise while GM’s total revenue has been heading lower between fiscal 2017 to 2022.
From a TTM perspective, Tesla’s total revenue clocked at $67 billion USD as of fiscal 2022 2Q while GM’s total revenue reached $132 billion in the same quarter.
On a dollar-to-dollar basis, GM’s total revenue was about 2X higher than that of Tesla.
While GM’s revenue has been much higher, it has been on a decline year over year and reached one of the lowest as of fiscal 2Q 2022.
On the other hand, Tesla’s total net sales and revenue have been trending higher, up 300% since fiscal 2017.
Therefore, in terms of revenue growth, Tesla again beats General Motors by a mile.
Gross Profit Margin
Tesla vs GM in gross profit margin
Another factor that is just as important as all previously discussed factors when it comes to Tesla vs GM’s stock is the profitability factor.
The profitability factor that we are looking at here is the gross profit margin.
In this aspect, the higher the gross profit margin, the better the profitability is.
That said, from a GAAP basis, Tesla’s gross profit margin has been much better than that of General Motors as shown in the chart above.
Tesla’s gross margin was in excess of 25% in fiscal Q2 2022 while GM’s gross margin came in at only 10%.
At these figures, Tesla’s profitability was nearly twice as much as that of General Motors.
More importantly, Tesla’s gross profit margin has been on a rise since fiscal 2017 while GM’s figures have been flat.
Over the last 3 years, GM’s gross profit margin has remained flat, underscoring the reality that the firm’s profitability has not improved much since fiscal 2017.
Again, Tesla wins General Motors by several miles in terms of gross profit margin.
Operating Profit Margin
Tesla vs GM in operating profit margin
Another profitability metric that delves into Tesla and GM’s profitability that we should explore is the operating profit margin.
Similar to the gross profit margin, the higher the operating profit margin, the better the operating result is.
From a GAAP basis, Tesla and GM’s operating margins were nearly at the same level in fiscal 2021.
However, Tesla’s operating profit margin continued to surge in the post-COVID period and reached as much as 15% as of 2Q 2022.
In contrast, GM’s figure settled at 5% as of fiscal 2Q 2022, roughly 200% lower than Tesla’s number.
Over the years, GM’s operating profit margin has been more or less flat while Tesla’s results have been growing as reflected in the expanding plot above.
Therefore, as of fiscal 2Q 2022, Tesla’s operating margin has surpassed that of General Motors by a very large margin.
Also, we can see that GM’s operating margin has declined post-2021 after reaching 10% and tumbled to as low as 5% as of 2Q 2022.
Therefore, from an operating perspective, Tesla operates much more efficiently than GM does.
Net Profit Margin
Tesla vs GM in net profit margin
Similar to the operating profit margin, Tesla managed to beat General Motors after coming off evenly with the company in 2021.
While Tesla’s net profit margin has been slightly lower prior to 2022, the figures have been on the rise, indicating that the firm’s net profit margin is fast closing in on that of GM.
As of fiscal 2Q 2022, Tesla’s net profit margin clocked at 14% compared to GM’s net profit margin of 6%.
Therefore, Tesla was twice as much profit as GM.
Operating Cash Flow Margin
Tesla vs GM in operating cash flow margin
From a cash flow perspective, Tesla generates much better operating cash flow than General Motors does.
As seen in the chart above, Tesla’s operating cash flow margin has been on a rise since fiscal 2017 and has been above 20% since fiscal 2021.
As of 2Q 2022, Tesla’s operating cash flow margin topped 21%, more than twice the number generated by GM.
As a result, Tesla generates much better operating cash flow compared to General Motors.
Free Cash Flow Margin
Tesla vs GM in free cash flow margin
While GM generates more than twice the amount of free cash flow, its free cash flow margin was much lower than that of Tesla as of fiscal Q2 2022.
Both car makers used to have nearly the same efficiency in free cash flow generation.
However, Tesla managed to pull forward and keep its free cash flow margin nearly unchanged at 10% in 2022.
On the other hand, GM’s free cash flow margin has been on a downtrend after topping 15% in 2021 and reached only 2% as of 2Q 2022.
Therefore, Tesla generates much better free cash flow than General Motors with respect to revenue.
While Tesla’s free cash flow margin has been on a rise, GM’s results also have been growing in the last few quarters but had only started to decline in 2022.
As a result, Tesla wins hands down when it comes to free cash flow.
Net Debt Margin
Tesla vs GM in net debt margin
In terms of net debt margin, Tesla had 0% while GM had 30% as of 2Q 2022.
A trend worth mentioning is that Tesla’s net debt margin has been on a decline while GM’s figure has been slightly on a rise.
In short, Tesla had no debt after accounting for cash on hand while GM still carried loads of indebtedness.
Dividends
Investors seeking income will consider dividends as an important factor when it comes to determining which company to invest in.
Speaking of dividends, income-seeking investors will be disappointed by Tesla’s non-dividend-paying policy.
In fact, Tesla has not paid a single dividend since its IPO in 2010 and will likely remain so in the foreseeable future. Read: Why doesn’t Tesla pay dividends?
While Tesla has not initiated any dividend-paying policy as of today, it does not necessarily mean that the company will do so forever.
It is still possible for Tesla to start paying dividends when the company’s fundamentals improve to the point that it makes loads of money.
On the other hand, General Motors has been a dividend-paying stock since 2014.
However, GM temporarily suspended its dividend in Q2 2020, due mainly to the COVID-19 disruption to its businesses.
In general, General Motors, as well as Ford, have been badly affected by the recent COVID-19 outbreak.
As a result, both of them have suspended dividend payout in order to retain cash and liquidity.
While GM had suspended dividend payout for more than 2 years, it has resumed the cash dividend as of 2Q 2022 by paying a modest rate of $0.09 USD per share.
At this dividend rate, GM’s cash dividend yield comes to about 1% on the back of a stock price of $40.
For your information, GM reinstated the cash dividend because of the improving fundamentals, including total vehicle sales and revenue growth during the post-COVID period.
Therefore, GM wins Tesla when it comes to cash dividends as Tesla is still a non-dividend-paying stock.
In short, investors seeking cash income should opt for GM’s stock.
Summary
Overall, we can see that Tesla’s stock is growth-oriented whereas GM’s stock is income-oriented.
Tesla has been showing growth in most areas, including vehicle sales, revenue, profitability, and cash flow.
On the other hand, GM’s profitability and cash flow have been steady and have maintained roughly at the same levels in the last 3 years.
As of fiscal 2022, we can see that Tesla has overtaken General Motors in many areas especially in profitability metrics, including gross margin, operating, and net profit margin.
In terms of cash flow margin, Tesla’s operating cash flow and free cash flow margins also have surpassed those of GM since fiscal 2020, meaning that Tesla generates much better cash flow with respect to sales than GM does.
As a result, Tesla’s stock is superior compared to GM’s stock due to the company’s strength in profitability and cash flow margins as well as the growth prospect.
Not to mention Tesla’s potential growth as a result of the growing popularity of electric vehicles.
In short, Tesla’s stock makes a much better buy now compared to GM’s stock.
However, if your sole purpose is to collect cash, you may go for GM’s stock as it’s currently paying a cash dividend that yields 1% based on the stock price of $40 USD.
References and Credits
1. All financial data and numbers in this article are obtained and referenced from General Motors and Tesla financial statements available in: GM SEC filings and Tesla SEC filings.
2. Featured images in this article are used under Creative Common licenses and obtained from the following source: Alpha and Marco Verch.
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Disclosure
The content in this article is for informational purposes only and is neither a recommendation nor a piece of financial advice to purchase a stock.
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